Let’s face it: we’re all attracted to the companies on the stock market we use every day. In many cases, a litmus test for how a growth company will perform over the long-run can be linked in some way to the level of frequency of usage by investors in general, as well as the strength of the companies underlying brand and its corresponding brand equity with customers and investors alike.
That said, investing in specific industries based on the need to display one’s personal beliefs or emotional attachment to a product or a company publicly can turn out to be a dangerous game.
For many technology or science-focused folks, confirmation bias relating to the incredible rise and fall of technology companies at the beginning of the last decade, or the rise and fall of the banking sector in the middle of the past decade, or the rise (and potential decline) of the marijuana industry today are all examples of over-exuberance from an investing public holding opinions which are translated into real, tangible investments in a sector which has clearly (in hindsight) become overheated.
As it is today in the North American cannabis industry, where investors looking to cash in on the newest commodity rush, seek to double or triple or perhaps 10x their money in a short amount of time simply by following the momentum of the industry.
It may be too early to tell how much momentum this sector may have moving forward, however it remains clear to me that expectations are getting out of control and the emotions of many investors are beginning to take over the logical thought processes ascribed to other sectors, prompting this article – a word of caution to those seeking growth and quick profits.
Invest wisely, my friends.
